Adani Ports and Special Economic Zone Ltd (APSEZ), Megha Engineering and Infrastructures Ltd, and Vishwa Samudra Engineering Pvt Ltd are in the race for a ₹11,733.28-crore contract to develop the marine infrastructure for the proposed outer harbour container terminal at V O Chidambaranar (VOC) Port.
The project, covering breakwater construction, dredging and reclamation, will be implemented under the Hybrid Annuity Mode (HAM), marking the second instance of a state-owned major port adopting this model for basic civil infrastructure works after the proposed Vadhvan Port in Maharashtra.
In a significant revision to the tender conditions, VOC Port Authority has replaced the earlier dredging and reclamation experience requirement with a qualification criterion based on the construction of at least 2 km of breakwater in India during the preceding five years. The move is expected to broaden domestic participation and reduce the dominance of European dredging companies in major marine infrastructure contracts.
The three bidders qualify based on their breakwater experience at Vizhinjam (2.96 km), Machilipatnam (2.325 km) and Mulapeta (3.435 km), respectively.
The renewed tender follows two unsuccessful attempts to implement the project under the earlier public-private partnership (PPP) structure, which envisaged an investment of ₹7,055.95 crore, excluding GST, with ₹1,950 crore in viability gap funding. The Prime Minister laid the foundation stone for the project on February 28, 2024.
Following stakeholder consultations and preparation of a revised Detailed Project Report, the port authority restructured the project into two components: ₹11,733.28 crore for marine infrastructure under HAM and ₹5,434.09 crore for container terminal mechanisation and operations under the Design, Build, Finance, Operate and Transfer (DBFOT) model. The restructured proposal received approval from the Public-Private Partnership Appraisal Committee (PPPAC) on April 23.
A major feature of the revised plan is the increase in design draft from 16 metres to 18 metres, enabling the port to accommodate vessels carrying up to 24,000 TEUs, compared with the earlier capacity of 18,000 TEUs. Consequently, dredging requirements have increased from 10.96 million cubic metres to 20.30 million cubic metres, alongside an extension of the outer channel from 8.6 km to 10.5 km and an increase in width from 230 metres to 295 metres.
The revised outer harbour is envisaged to have a total handling capacity of 5.2 million TEUs, with two terminals of 2.6 million TEUs each, against the earlier proposed capacity of 4 million TEUs.
With the revised scope and cost escalation, the total project cost, including both HAM and DBFOT components, has increased to ₹17,167.36 crore, including GST, from the earlier estimate of ₹8,326.02 crore.
Under the HAM arrangement, the port authority will fund 45% of the project cost during construction in 10 equal instalments. The remaining amount will be arranged by the concessionaire through debt and equity and repaid in 20 half-yearly instalments after completion of the respective phase. The HAM concessionaire will undertake four years of construction followed by 10 years of operation and maintenance, without collecting user charges.
The container terminals, meanwhile, will be developed under DBFOT concessions spanning 30 years, including two years for construction, allowing private operators to determine and collect user charges based on market conditions.
The port authority estimates that the additional capacity could generate around ₹43,000 crore in incremental royalty and other revenues over the 20-year period from 2041 to 2060.
The restructured model is intended to improve project bankability by placing a significant share of marine infrastructure construction and financing risks with the port authority while retaining private sector participation in the revenue-generating container terminal operations.